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RCS profits up, stock down

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ROME -- Italy's largest publisher, RCS MediaGroup, has reported that profits surged 26% last year compared with 2006 and that it has taken full control of two television subsidiaries it partially owned. But the company's stock sank 1% on the news as investors expected stronger results.

Milan-based RCS -- the publisher of Italy's largest newspaper, Corriere della Sera -- reported after market close Thursday that profits last year stood at 360.3 million euros ($533.2 million) on revenue of 2.74 billion euros ($4.1 billion). Those figures were 26% and 15% higher, respectively, than during the comparison period.

Meanwhile, the company said early Friday that it plans to acquire the 44.6% of Spanish terrestrial broadcaster VEO Television and the 49% stake in Spanish cable broadcaster Digicast that it doesn't already own. Terms of those two deals were not released.

The company also said that it has no plans to unload newspapers it owns in Spain and Portugal, quashing rumors in the Italian, Spanish and Portuguese press that such a deal could be in the works.

But investors were unimpressed by all the news. The stock retreated 1% in trading Friday and is down 11.8% so far this year.

The overall stock exchange in Milan and the exchanges media index were both down about 0.5% on the day.

Analysts said that the shares enjoyed strong gains at the end of last year and that, so far in 2008, investors have sold shares to lock in profits.

"I don't think we'll see another run for RCS shares until the company digests its recent acquisitions and gives some indication that the strong results from 2007 will continue into this year," Hildebrandt and Ferrar economist Javier Noriega said in an interview.